Web-based services transcend borders

Latin music and Internet were buzzwords of the late ’90s, and combining the two naturally emerged as a hot idea as the decade ended. But like their counterparts at U.S.-based Web sites, many dot-comers working at fledgling Latin American ventures saw spectacular startups give way to failed sites, layoffs and stalled IPOs over the last year.

Nevertheless, 21 million people are online today in the region, according to new figures released by Jupiter, which projecs the number of users will reach 86 million by 2006. Thus, media companies and, increasingly, multinational record labels are surveying the landscape with a watchful eye.

“The development of digital distribution in the Latin region is going to be a slow process,” notes Jack Alfandary, BMG Entertainment’s director of online marketing for the Latin region. “Whatever happens now in the U.S. will dictate what happens in our region.”

The label’s own Spanish-language Web site, ClicMusica.com, features samples and downloads of new music and videos by BMG artists, from current pop icon Christina Aguilera to the popular Colombian alternative rock band Aterciopelados.

“At this time our Internet strategy focuses on using the Internet as a marketing tool to allow artists to get closer to their fans,” says Alfandary. “We’re not developing technology, we’re developing artists and music. But we’re watching the development of that technology to see what we do in the future.”

Devorame, a bilingual music directory, points users to legal downloads on other Internet sites.

“To a teenager in Latin America, the Internet can be so important,” says David Perez, director of business development and a founder of the Netco, which has offices in Santiago and Miami. “It’s not the same situation as in the United States where there are so many channels through which to find the music you like.

“Our service doesn’t know borders,” he adds. “It’s naturally panregional. If we have an Argentine rock channel there’s no reason not to offer that to someone in Mexico as well.”

Country by country

While that pan-Latin focus has become increasingly prevalent as young Latin Americans embrace a broad range of international artists like never before, it can chafe with the traditional structure of the major record labels, by which music is released and marketed on a country-by-country basis.

“Latin America is in a different stage of development within the Internet world,” says Melanie Masterson, veep of new media for EMI Intl. “For example, you’re going to be able to do different things in Brazil than in the rest of Latin America, so we’ll have to approach things from a country-to-country standpoint.”

Accordingly, songs and videos from EMI’s Latin releases are also featured on the label’s own country-specific promotional sites: www.emilatin.com for the U.S. Hispanic market; www.emi.com.mx, Mexico; and www.virgin.com.br, Brazil.

Licensing

Ivan Parron, founder and CEO of Ritmoteca.com, has found that licensing Latin music can be especially complex. He has signed global distribution deals with Latin independents like Caiman Music and RMM Records, and has a nonexclusive deal with Sony Music. But the latter agreement as well as ones with other major labels is for the U.S. only. Digital rights for other territories must be negotiated on a country-by-country basis. For now, people who come to the site from a territory that has not been approved are blocked from downloading songs or albums.

How smaller companies will compete with offerings by large conglomerates remains to be seen. The Cisneros Group, America Online’s partner in AOL Latin America, has filed for a planned merger with the portal El Sitio and the financial group of Hicks, Muse, Tate & Furst for a multimedia content venture to be called Claxson Interactive Group.

Last year, CTG and ArtistDirect announced they were joining to create “the premiere music portal for Latin America,” but ArtistDirect Latin America has yet to be seen and is not due to be launched until the second quarter of this year.

“What we’re trying to do is come up with a product that will grow concurrently with the market, not only the Internet market but the general music market in Latin America,” says ArtistDirect Latin America General Manager Sebastian Arias Duval. “We’re convinced that the Internet will be the ultimate way to sell music in the future.”

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